To know whether refinancing pays off, you need to compare two scenarios: staying with the existing mortgage or refinancing. Here is how.
Step 1: Collect the data
Ask the bank for a payoff balance statement for each track: balance, rate, remaining term, and the fees that would apply if you repaid today.
Step 2: Calculate the cost of refinancing
- Early repayment fees (mainly capitalization on fixed tracks). Early repayment fees
- A file-opening fee at the new bank (if any).
- Appraisal, registration and other costs. The cost of refinancing
Step 3: Calculate the new payment
On the same balance and over the same term (so the comparison is fair), with the rates the bank offers today.
Step 4: The break-even point
How many months does it take for the monthly savings to cover the cost of refinancing?
An example
A balance of NIS 900,000, an average rate of 5.5%, 22 years remaining. A new offer at 4.6%. - Payment today: about NIS 5,885. - Payment after refinancing: about NIS 5,425. - Monthly savings: about NIS 460. - Refinancing costs: NIS 8,000 → break-even after about 18 months. - Total savings over the period: over NIS 110,000.
(A simple calculation at a non-linked rate.) Enter your own data in the refinancing calculator (in Hebrew).
What the calculator does not know
CPI linkage, future exit points, and expected changes in your life. This is where personal advice makes the difference.